💸 Giving while living

6Hey team!

I’m dropping in to share a hot & fresh study from The Compound Insights and Wealth.com on legacy planning and the giving-while-living approach – or passing along assets and values while you’re alive, instead of in a will.

Never heard of the concept? You’re not alone. I’ll explain exactly what giving while living is and why it’s so important today more than ever.

And if you’re curious about what The Compound Insights is all about, check out my post on our new research venture. Reach out to Graham Thomas if you want to work with us.

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Unaffordability is one of the biggest challenges in today’s society.

Exhibit A: the average 30-year mortgage payment is up more than 60% since the end of 2019. 

Exhibit B:  Tuition and childcare costs have grown at double the pace of inflation since the turn of the century.

I don’t need to rattle off a bunch of numbers for you to know how expensive life has become. You see it – in the grocery store, at the gas pump, on vacation, in your neighborhood.

There aren’t any easy fixes here, either. Our best shot at making life more affordable is ensuring our paychecks grow faster than prices. In certain areas of the economy, like the housing market, it may take new laws and policy to pave the way for affordability.

But what if I told you another solution is sitting across the dinner table, talking your ear off about bingo club and gardening?

Silent generation and boomer Americans are expected to pass $90 trillion in assets down to their heirs over the next couple of decades, according to Cerulli Associates data. If you’re a millennial or younger, chances are you have a share of that $90 trillion coming your way.

Still, the when is a mystery only the grim reaper knows. And while you love your parents dearly, you need help now.

This is the cruel irony of the affordability crisis, especially when it comes to financial planning. Older Americans are sitting on a mountain of home equity and cash, yet many of them are waiting to pass on trillions in generational wealth as they watch their kids struggle. After all, the largest living cohort of Americans is 34, and at a prime age to buy a house and start a family.

That’s what struck me the most in The Compound Insights’ latest research project in collaboration with Wealth.com. According to our survey of U.S. financial advisors, just 46% of their clients plan to pass on assets while they’re still alive – the “give while living” approach.

It’s all because we’re still stuck in the mindset of traditional legacy planning – an awkward dance of conversations about what happens when you die.

Nobody likes talking about death, yet we still treat estate planning as some exercise that we dump on our heirs when we’re six feet under. The whole process is so opaque and depressing. No wonder Wealth.com estimates nearly 70% of Americans don’t have an estate plan in place.

What if it doesn’t have to be this way? 

I’ll be honest – the thought of intentionally passing along assets while I’m alive had never crossed my mind until I started working in my current role (to be fair, I haven’t had heirs for long). Estate planning is a common question we get from clients, and our advisors are constantly having conversations with parents and their kids about where their familial wealth stands.

Not only can it help children gain a foothold in an increasingly prohibitive economy, but it can help you and your inheritors collectively shape what your family’s financial legacy could look like. It also allows you to witness your legacy play out first hand.. What meaning does wealth have anyway if you can’t enjoy the fruits of your labor?

Giving while living isn’t rocket science, and you don’t need an advisor or trust fund to get started. Saving for your child’s college fund is giving while living. Gifting your adult daughter money for a house down payment is giving while living. Passing down that old armoire from Grandma’s house is giving while living. Heck, having a conversation about your finances with your parents is giving while living, even if you can’t put a price tag on it.

Our research with Wealth.com centered around financial advisors’ approaches to legacy planning. We learned that advisors who promote giving while living practices enjoy stronger business outcomes and more confidence in securing younger clients – an opportunity at a time when they’re largely shunning professional advice.

If you’re interested in reading our findings, you can download our paper here.

Thanks for reading!

Callie

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